All about assignments

Ever think about buying or selling a preconstruction deal before it’s ready?  Known as an “assignment”, here’s the pros and cons of flipping (or buying) assignments.  


I guess we should start off by explaining what an assignment is.  Imagine that a purchaser enters in to an agreement to buy a new construction property a few years ago before the building even starts building, and then turns around and sells it to someone else before the completion date in the original agreement.  In Toronto this property is most likely a pre-construction condominium purchase, but an assignment can also apply to new construction freehold homes or even commercial properties.  Or, it could be an assignment of a resale agreement before the closing date.  The only thing that is common is that the property has not been registered on title to the original purchaser, and the original purchaser (known as the assignor) is selling their right to close on the property to the new purchaser (known as the assignee).


The most common case of assignments are pre-construction condos in Toronto.  There are two dates you should pay attention to, one is the interim occupancy date, and the other is the final closing date.  The former is when you get your keys, and the latter is when you get your mortgage. 

However, the only date that matters for assignments is the final closing date.

Here is a list of pros and cons of buying or selling an assignment:


It may be tempting to cash out, take the money, and run.  However, please consider the following before making your decision to sell prior to completion.


  • You will realize instant gains, and the best part is that it's leveraged.  Your initial deposit will be around 20%, sometimes even less depending on the project and depending on when you decide to assign the contract.  Your selling price will be based on the market price of the overall asset.

  • No headaches of getting financing, because let's face it, it's getting increasingly difficult to get a mortgage in today's market.

  • You don't have to worry about market fluctuations, as who knows what will happen to real estate prices by the time the building registers.

  • No surprises from the developer.  Since you bought off plans, often times it is difficult to envision what the final product will be.  Perhaps your view is blocked by an unsightly neighbouring building, or that you didn't get what you were promised.  Maybe you expected the square footage of the property to be larger than in real life.

  • Let the next buyer worry about the extra closing costs.  True, you or your REALTOR was smart enough to cap your development charges and levies at the time of purchase, but there are always extra closing costs that you don't expect such as HST, land transfer taxes, legal costs, and all those minor fees and utility deposits that you did not expect.


  • Be cautious of any tax implications that you may have.  Remember that an assignment of the Agreement of Purchase and Sale is really like selling the contract between you as the original purchaser and the developer.  This may be considered business income in the eyes of the Canada Revenue Agency, which is fully taxable unlike the capital gains exemptions that you get from the sale of real property.  The CRA is aware of this practice from condo flippers that do not declare the income, and is cracking down on individuals not reporting it.

  • You may be selling yourself short, as the property values will likely increase after the building is registered and vacancies are all absorbed.  There won't be any directly comparable properties to base the asking price on, because nothing else is listed.  You may have to use indirect comparable properties, such as units in other buildings or houses in neighbouring developments.

  • It may or may not be mentioned in an amendment to the Agreement of Purchase and Sale at the original terms of the purchase, but the assignment fee may sometimes outweigh the point of this assignment altogether.  That's even if the developer allows you to assign your purchase in the first place.

  • If the new purchaser isn't able to close on the property, you may still be on the hook to close.  Chances are that you already have your money in hand since your awesome REALTOR has negotiated your original deposit and any profit out of the deal already, but technically you are legally bound to the contract in case the new purchaser is nowhere to be found at the final closing.  In this case, you probably wouldn't be prepared to close either on such short notice.

  • You may be limited on how you can market your property for assignments.  In the case of preconstruction agreements, the developer likely prohibits the advertising of your property for sale on the MLS or anywhere else, because you may be competing with their remaining inventory.  It's probably in the second or third page of your agreement.  Any violation of these terms can be considered a breach of the original Agreement of Purchase and Sale.  I have yet to see a developer terminate an agreement due to this, usually they give you a warning.  However, you don't want to be the first case of this.  Of course, it will come down to a legal battle, but it's black and white.


Purchasing an assignment from someone else might be a worthwhile endeavour.  Many of the pros and cons may mirror the opposite of those mentioned for the seller already.


  • It can be cheaper than the current market value of a similar resale property, as the assignor (the seller or the original purchaser) would need to give an incentive to purchase all the uncertainty that comes with buying something that probably isn't built yet.  Also, there probably has been a (significant) increase in property values since the original purchase, so there may be some room to negotiate.  However in a seller's market or a high demand property, this probably isn't the case.

  • Perhaps it's a good deal, if the assignor (the seller or the original purchaser) is under a distressed situation.  Maybe you can negotiation a win-win situation, where you get it at a great price and they get bailed out of a sticky situation.

  • It will be a brand new property, as it wouldn't have been lived in.  Who doesn't love that new car smell?

  • Also, new properties have the newest building technologies.  Floor-to-ceiling glass, state of the art appliances, home automation, all that sexy stuff.

  • If you need a longer closing, this may work out in your benefit.  Usually assignments are sold well before the final closing date.

  • Maybe you're not finding what you need on the resale market, this might be another avenue to expand your search in to.


  • It can be cash intensive, as any smart assignor (the seller or the original purchaser) will want their original deposit and their profit upfront.  This can require a large amount of cash required to close, as you won't be able to get a mortgage until the final closing date.  Almost all lenders would want to secure their loan on title, but there is no title to secure it to when it is still under the interim occupancy date. 

  • There is always the risk that the developer could cancel the projectIf this happens, then the developer would refund you back the original deposit with maybe some small interest, and you would be left to chase the original purchaser back for the hefty profit that they may have already spent.  It doesn't happen often, but if it does then you might wind up in a wild goose chase.

  • You may not get what you expect.  Unless you're experienced from buying from plans, the final product may be smaller than what you actual expected it to be in real life.  Or there may be an outside influence that couldn't possibly be shown on the plans.

  • You will have to inherit all the extra closing costs, such as development levies, utility hookups, etc.  Also, if your REALTOR wasn't experienced enough to know that you have to hold back funds for property taxes from the day that the original purchaser took occupancy before final closing, then you may be left chasing them down for that period of time when you finally get your retroactive tax bill.

  • You don't have any resale data to compare to, so you may be buying on speculation.  Will the property values support the new purchase price once it's actually built?

  • You might open yourself up to a changing market because of the length of time it can take to final closing.  That can be a good or a bad thing, depending on which way the market goes.  If you're looking for a interest rate hold, most banks don't hold their rates for more than 3-6 months (we have a bank that will hold it for much longer), so you may open yourself up to higher interest rates.  Or prices may drop, so you might find yourself having to put a larger than expected down payment.


If you're still interested in buying or selling an assignment, make sure you reach out to a specialist that can walk you through your personal situation.  As you can imagine, it can be quite complicated as there are many things to consider.  Let us structure a deal to protect you and look out for your best interests!  To learn more, please drop us a line.

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Buying VS Renting in the Toronto real estate market

We know that coming up with the downpayment for a property is tough, especially with the average price of a detached home in Toronto being $1,250,235 ($532,700 for a condo) and the new lending rules. However, here are some reasons why we think it makes sense to buy vs rent.

Toronto Real Estate Market Update - December 2017

Here are 8 key indicators I use to check on the health of the Toronto real estate market!
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Hi it's Kenneth Yim from Keller Williams Realty.  I know you get a lot of mixed headlines with what's happening in the Toronto real estate market, so I'm here to give you eight key indicators as to what's actually happening. Check it out!

So I have to tell you, this is only for 416.  If you need the numbers for 905, please feel free to give me a call.  

Okay, I know the number you are all curious about is the average price.  So here's everything since 1996, and as you can see, if you draw a regression line, you can see that we're slightly above average, but you know Toronto has been growing at a rapid pace and you know it's a wonderful place to be. We're still cheap compared to the rest of the world.

Here's actually what's happening, year over year. Now we'll zoom in a little bit, we'll see the five year average. And you can see it follows two little humps. So here we are. We're just about to finish the fall market, getting in to the winter months. Many of you ask, "when's the best time to sell"? Well, it's either spring or fall, that's the highest average price, and the lowest price is typically the summer when everyone is on vacation, and the winters when the holiday season hits.

So really, it's up to you.  I mean the average price is the highest in the spring and the fall, but as you will see in the next slide, you will have the most competition.  Similarly, if you are looking to buy at the lowest price point, you might not have a lot of options in the winter and the summer.

So let's get in to the next slide.  The number of units sold.  This shows the volume of activity, and again it follows two major humps, you'll see in the spring and in the fall you'll have the highest activity, and in the summer and the winter, everyone is on vacation and holidays, and there's less units sold.  So here we are now, and as you can see there's going to be a lot less activity in the coming months, but then again the average price goes a little bit lower.  So it might be an opportunity for buyers.

Now the third key indicator is the number of new listings in the market. As you can see, we have a lot more new listings on the market.  But it does follow the typical curve that we've seen before.

The fourth thing, let's match them up. So the ratio you see here is basically the amount of units sold compared to the number of new listings that come on to the market.  Right now we're just around 60% of [units sold] to new listings.  So if you look at the trend line, we're seeing slightly less sales, but overall the market is pretty healthy.

The number of active listings.  So that's what's currently listed in the market and hasn't been sold yet.  We'll see the trend line is moving a little bit up. In the beginning part of the year, you can see it's been pretty low, so things have been selling, fast, as you know.

Now if you take these numbers together, I think this is the most powerful slide, the months of inventory.  So basically, that means if nothing new were to come on to the market, how many months would it take to sell whatever we have active on the market?  So we take the number of active listings, divide that the number of sales every month.  So as you can see right now, the months of inventory is about 1.8 months.  So if nothing new were to come on the market, it would take about 1.8 months to sell everything that we have on the market.  It's actually not that bad.  Compare this to 2008 when we had the big tech bust, and when the U.S. economy collapsed.  So at the peak of the crash, we had almost 8 months of inventory. As you know, that blip didn't last long. Overall, we're still pretty healthy.

The days on market, tells us on average, how long it takes to sell a home in today's market.  And as you can see, the numbers are trending downwards. Although we're a little bit above the average line, it's still going down. We're looking right now of an average of about 21 days to sell your home in today's market.  And again, it follows the same seasonality curve. The spring and the fall is the hottest market, and the summer and the winter it's a little bit slower because people are on vacation. In this spring in 2017, you saw a crazy boom, everything was selling really fast.

So this last slide, the sold to ask ratio, will tell you if the market is typically trending to have bidding wars or not.  So if you're asking for $100.00, right now you're going to get $99.30.  In the early part of the year, it was actually approaching 112%! That's crazy! So right now we're a little bit under, I think it's a great time to get in, people are getting under what they're asking.  If you're looking to sell, well, maybe now is the perfect time to trade up. 

So as you can see, we're not going to head to a crash any time soon.  But we have less than a month before the government implements their new mortgage qualification rules. If you need to know how that's going to affect you, please give me a call.

Don't forget to subscribe to our YouTube channel, or give us a call and we'll give you a one-on-one market update with that's going to affect you.  Thanks for watching!

Five Minutes with Marlon Yee and Kenneth Yim

November 2017

Join us as we talk shop about Toronto real estate and some of our our investment success stories, and how you can get started if you have no money down.

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Marlon Yee


Call me at 647.299.8252 or email me at to get all your options!

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300-801 Yorkmills Rd. Toronto ON

There are 7 Ways to Make Money In Real Estate

Join us as Ken takes us through the seven ways to make money in real estate.  For more blog posts, click here.


Hey guys, it's Kenneth Yim from Keller Williams Realty here, with another real investing video. This time I want to tell you about seven different ways you can make money in real estate.

All this information comes from Gary Keller's Millionaire Real Estate Investor book. Really really good stuff.

So first things first, it's called "finding and referring". Okay? So that means if you find a property either on or off market, and you introduce it to an investor in to it, often times they'd be willing to pay you a finder's fee. Now, as you can imagine, the fee probably won't be that high, but at least it's a little bit of something and you didn't have to put any cash out.  So that's a good way to do it. So always be looking on the market.

Number 2 would be "controlling and assigning".  Oops, let me get it in focus there.  Controlling and assigning.  Now these are a little bit difficult to come across, I mean really you're flipping the paper and not the actual property, andI caution you because for tax purposes you'd be paying business tax, not capital gains tax. Talk to your accountant about that, but you know, it's a great way to make some money with minimal down.  So, all you do is put some money down towards securing the property, getting it in to contract, putting maybe a long close, and then finding another buyer that would be willing to pay more than what you paid for it.  Not a bad option.  I've done that once before and it was pretty awesome... actually a few times. It was awesome.

Another one, "buy and sell".  Ok so you buy the property, then right away you close on it and then you can flip it out for a little more money as well too. Now again, it's a little bit difficult to make money on that especially with the all the high closing costs, like land transfer taxes, and selling costs, lawyer fees, and all that.  So there would have to be a lot of value in there to make it. 

Again, another one to do is "buy, improve, and sell", commonly known as the "fix and flip".  I'm doing one of these myself, it's not a bad way to make money.  You buy it, close on it, fix it, flip it, and try to profit within 6 months, maybe a year.  This is what I would say... these four strategies that we just talked about, "buy, sell, improve", "buy and sell", "control and assign", and also "find and refer" is the best way to get cash quickly.  To build your cash.  

But the real, real, real way to make money is when you grow your equity.  Ok?  So here's another option: it's a little bit creative, it's called the "lease option". Alright? So maybe you potentially you have a property that you already have and you've given it to somebody like a tenant and maybe they're trying to fix their credit (so they can't buy yet), you offer them a lease-to-own scenario.  Anywhere from 2 to 5 years. So they pay you often sometimes it can be a higher than market rent, so you can get some good cashflow there, you're also building equity because you know you're holding the property obviously, and then you sell it to them at a pre-determined price. Now it could be a win-win, depending on the situation, but it's a good way to make some money.  Like yeah... you can get really creative in that. You HAVE to get really creative.

Here's my favourite: "buy and hold".  This is what I'm doing with all my pre-construction condos. The reason why I bought a lot of them and I think it makes it easy for the everyday investor, is because you can take that money out of your equity of your home, let's just say, or savings.  You have staggered deposits, over a two year period.  You'd be paying a certain amount every single payment, maybe $30,000 to $40,000 per payment, until you hit your deposits, your 20% down.  Then after that, you can wait for the building to be built, it would be about 4 to 5 years.  The market typically WILL rise, and then at that point you get your mortgage, and then you kind of just hold on it right?  Put a tenant in there, hold, hold, hold!  Don't ever sell.  Take a line of credit out if you want to. If you're kind of getting lost, just take a look at my last video on how... I'll point that to you next.  Buy and hold I think is my favourite strategy.  It just kind of, you know, five years flies by so fast.  You don't even notice it.

Also the one to create real value is to "buy, improve, and hold".  Right, so same kind of idea.  You buy it, put some money in to renovations, and then you can hold on to it, get a tenant in there, and then maybe improve it some more. This also includes buying a piece of property... a piece of land let's say or even a building, and putting more intensification to it, so more density, creating more floors, maybe getting some re-zoning to do that. Something that's one floor now, and then adding two more floors to it, so that's 3 times the amount of space you have.  That's also amazing too.  So this also can get very creative, and also needs a lot of expertise as well too, but probably is the best way to make money. 

So, there you have it, seven ways to make money in real estate.  If you want to talk a little bit more, give me a shout!

Oh yeah, and if you like what you see, don't forget to click on subscribe or check out our last videos that we just did.  Thank you (for watching)!

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How I'm Building My Wealth Through Real Estate

How I’m building my wealth: walking around the monopoly board locking up properties. The second phase will be trading up to build hotels.

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8 Reasons Why I Love Investing in Real Estate

Here are 8 reasons why real estate is an "able" investment. Try finding any other asset class that has all of these benefits, that the average consumer can easy purchase and understand.

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If you're not investing in real estate, you're missing out!  Let me share with you 8 reasons why I love investing in real estate. 

1. It's Accessible.

 Anyone can buy it. As long as you're over the age of 18 years old, whether you're a Canadian resident or not, you can buy real estate.  Now recently Ontario implemented a "Non-Resident Speculation Tax", which honestly is just a tax grab.  I've noticed that our foreign clients have not cared. At the end of the day, Canada is an economically AND politically stable country.  Anyway, that's a whole other topic and I'll make a video about it sometime.

2. It's Appreciatable

Real estate typically will increase in value over time. One thing's for sure, there's only so much of it, and when something comes in limited supply, the price is bound to go up over time.

3. It's Leverageable.

You can buy on margin, and borrow against your equity. When you buy a home, you typically don't buy the place in cash. Usually you get about 20% down, and then you finance the rest through a mortgage (you can actually go less than 20% down). However, any gains that you make on the property will be real, so if you think about it, here's a simple example. You buy a $1,000,000 home with 20% down, that's $200,000 in cash. But the value of the home goes up by 20% every year, which is pretty realistic, even in today's market. So basically, you've just made $200,000 on your $200,000 down, or double of you've put down, in one year only. Now I know it's a very simplistic example, as there's closing costs, transaction fees, taxes that you have to pay, and you really don't see the gains until you actually sell. But you can always re-mortgage the property and take the equity out to use towards other investments. Anyway, imagine what would happen if you held it longer than a year!

4. It's Rentable.

Chances are, whatever you invest in will be rentable. Now there's different schools of thought of owning vs. renting, and how to use your money, but let me tell you this. With vacancy rates hover around 1% in Toronto, you'll typically see bidding wars for properties for tenants to live in. But tenants don't care about the real estate market, they just want a place to rest their heads! And the average rent for a one bedroom condo is over $2,000, that's crazy! Two bedrooms are just around $3,000, and that's just the average! And if you have a tenant in there, even if the rents aren't cashflow positive after expenses, they're still paying down your equity, and paying down your mortgage. I'm sure you've heard it before, tenants are always paying off the landlord's mortgages.

5. It's Improvable.

If you purchase a place that's a dump, you're probably going to get a discount on it. But even if it isn't, you can always improve the property and increase the value over time. You want to be careful not to over-improve the property and not get the returns, unless you're using it for your own enjoyment.

Number 6, and this is my favourite, there's great tax benefits to owning real estate. I don't know how long this is going to last, but currently if you're a resident of Canada, let's say you made $200,000 on your $1,000,000 property in one year, and you sold it, if it's your own primary residence, you don't pay any tax on that, that's great! And if it's not your primary residence, because I always say, you're home is not an investment because you're always going to need somewhere to live, somewhere equal or greater than where you currently live now, then you only pay tax on 50% of that. So in that example, $100,000 of that goes towards your income and you pay your taxes as you normally would. That's great! What other investment class do you know that can do this for you? Because typically you have to pay taxes on all of the gains. In addition to this, you can write off all the expenses to rental properties. If you purchase the property in a holding company, you can always defer the income.

7. It's Stable.

 It's slow to rise and slow to fall. Now the number one complaint I hear about investing in real estate is that it's not liquid, but is that a bad thing? I don't want to have sleepless nights and lose my investment in a blink of an eye. Even if the real estate market does drop quickly, there won't be mass panic and it won't go to zero. And really, it won't affect you unless you sell. Your mortgage is commonly locked in to a five year term in Canada, so either you (or your tenants) would be paying it off, and they'll be paying the same monthly payments, regardless of what the market is doing. As long as you can hold on, you can probably weather any storms, and more importantly, ride the waves.

8. It's Liveable.

At the end of the day, someone is going to want to live in that property, even if the market tanks. Try living in your BlackBerry or Nortel stock. So I hope that opens your eyes, and I challenge you to find a better investment class. If you're already convinced and you don't know what to invest in, you can always give us a call, we'll find the right investment for you. And don't forget, subscribe to our channel, and stay tuned for our next video. Until then, happy investing!

Toronto real estate market and the new 15% foreign buyer tax

About two months ago, the Liberal government announced new housing measures that are supposed to cool the market.  It's supposed to aim directly at foreign buyers.  

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